Why is Oil expensive in India?

Oh you have got to live in India to know the oil prices how expensive they are when compared to other Asian countries. This thought was daunting me so decided to explore this area . Well India to start with is still unexplored in the natural resources area , it is quite surprising to notice that with efforts by the government of India and some big Oil companies including foreign investors, there have been 21 oil and gas discoveries amounting to 800 million tons of oil and gas in the past two years , but even after this the domestic oil production is still stagnant at 32 million tons for the past few years.

To overcome this shortage ,India imports about two thirds for it’s oil consumption. This is obviously expensive. But the more important issue here is where does it import from , mainly from Iran is the answer. It was thought that it is much easier to build a pipeline from Iran to India worth $17 billion , but when you look at it , this line is 1700 kilometers long and the 700 kilometers will have to go through Pakistan , which is the problem. The Indian borders are a big hindrance to the Indian oil solution. On one side are the bad ties with Pakistan , on the other side there are China and Bangladesh . There were also talks between Myanmar and India to build an oil pipeline if they were to sideline China and in the same way build a line from Iran to India by ignoring Pakistan but it is way too expensive.

To counter such problems , many Indian companies have support from the Indian Government to have join talks with countries like China and Russia through bi-lateral talks , where in Indian companies have a percentage stake in their companies and also invest in offshore gas fields in countries like Vietnam, Algeria , Kazakhstan , Venezuela, Libya , Syria, Indonesia, Yemen , have deep water exploration in Sri Lanka , and also in talks to acquire energy assets in Nigeria, Chad, Angola, Cameroon, Congo and Gabon in Africa, as well as in South America and the Middle East.

If India needs a solution from this expensive oil price hike , it also needs to look at other avenues for energy other than oil . Apart from that India needs to invest heavily in infrastructure to be able to explore more oil fields in it’s own country , this will help it to minimize it’s imports and become self-sufficient . If this is not taken care of now, by the year 2020 it will need to import all of it’s energy needs. If oil in India becomes even more expensive then investments made by foreign companies may see a rough ride here as India may become an expensive place to invest in with less profits for such companies.

Hence, India needs to think and act fast to avoid such consequences .